The Threats of Zara 1 Fierce Competition weighs a 020 with a rating of 4 one of

The threats of zara 1 fierce competition weighs a 020

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The Threats of Zara: 1. Fierce Competition weighs a 0.20 with a rating of 4; one of the biggest threats because of new and affordable products from different stores such as H&M, Forever 21, and Uniqlo may harm Zara in terms of consumers’ loyalty. The analysis from Five-Forces also gives us some details about how this fierce competition can affects Zara. However, somehow, regardless the amount of advertising investments Zara made, this brand can still enjoy remarkable growth across the globe. Allegedly it is the supply chain that makes it the winner. Therefore, we conclude that the response rate is superior. 2. Lawsuit related to Sweatshops weighs a 0.05 with a rating of 2; this threat is not much of a threat because the cases were not highly publicized, and also because
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15 the company has created a commitment to stop the practice of sweatshops in every factory; in every country where they produce their products. 3. Possible imitation of goods weighs a 0.05 with a rating of 2; there is a risk of Zara’s products being copied, either by their competitor (the designs) or by irresponsible people that practice counterfeiting. However, since Zara is targeting the middle-upper class, therefore, it is not much of concern. Moreover, Zara’s consumers are popularly known as loyal consumers to the brand. 4. Dilution of Brand Equity weighs a 0.2 with a rating of 4; this is also an important threat because it can decrease in its brand value in customer eyes. Therefore, Zara is implementing their best strategies to increase the brand equity. Probably more significantly to their European consumers through the eco-friendly company campaign which is highly noticed and precedence by European consumers. Based on the EFE Matrix result, we see that Zara has a score of 3.45 which indicates a strong response from Zara towards the opportunities and anticipation of threats. 3.3 Competitive Profile Matrix Critical Success Factors Weight Zara H&M Uniqlo Rating Score Rating Score Rating Score Target foreign market selection 0.15 4 0.6 3 0.45 2 0.3 Enter marketing strategy 0.05 2 0.1 2 0.1 4 0.2 Timing of entry 0.05 2 0.1 2 0.1 4 0.2 Recognition of brand 0.12 4 0.48 3 0.36 3 0.36 Customers knowledge 0.1 4 0.4 3 0.3 3 0.3 Marketing support in global market 0.06 1 0.06 4 0.24 4 0.24 Location selection 0.04 3 0.12 2 0.08 3 0.12 Design collection 0.12 3 0.36 3 0.36 2 0.24 Employee 0.05 2 0.1 2 0.1 2 0.1 Price policy 0.1 3 0.3 4 0.4 4 0.4 Sales promotion 0.05 1 0.05 4 0.2 4 0.2 Organization and control business 0.11 4 0.44 2 0.22 3 0.33 TOTAL 1 3.11 2.91 2.99 a. Target Foreign Market Selection: One of the most important factors in determining success in this highly competitive industry which force its players to have massive
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16 expansion strategy. That is why the weight is 15%. Comparing to its other 2 competitors, Zara has the highest score since they have been in the international market longer then H&M and Uniqlo. Zara was the first to start opening new stores in countries outside their country-of-origin’s continent. Zara expanded outside Europe firstly in 1997 to Israel[Ind132], followed by H&M which is originated in Sweden, first opened their store outside Europe in 2001, located in New York.
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